Canada introduced a ban Tuesday against bumping passengers from commercial flights following a public outcry over a passenger being dragged off a plane in the United States, and other incidents.
The passenger bill of rights is part of a package of transportation law amendments that also expand the limit on airline foreign ownership from 25 to 49 percent, and require railways to install voice and video recorders on locomotives.
"We heard recent news reports about shoddy treatment of air passengers," Transportation Minister Marc Garneau told a press conference.
"Such incidents will not be tolerated in Canada," he said. "When Canadians buy an airline ticket they expect the airline to keep its part of the deal."
The proposed legislation sets out minimum compensation for passengers who volunteer to give up their seat if a flight is overbooked, or for lost luggage.
Airlines would also have to pay for long delays on tarmacs, seat children near a parent at no extra charge and develop new standards for transporting musical instruments.
The latter was in response to travelling musicians complaining on social media about broken guitars and other instruments during flights.
Last month a man at the center of a worldwide uproar was left bloodied after being pulled from his seat by security guards and dragged off a United Airlines flight in Chicago to make room for airline crew.
The 69-year-old doctor suffered a concussion, and a broken nose and teeth, according to his lawyers.
If passed by Canada's parliament, the legislation would come into force in 2018.